Ambuja Cements gains on bargain hunting after announcing weak Q2 results

Ambuja Cements rose 0.23% to Rs 234.85 at 10:00 IST on BSE on bargain hunting after the company announced its Q2 results.

The result was announced after market hours yesterday, 27 July 2015.

Meanwhile, the S&P BSE Sensex was up 18.33 points or 0.03% at 27,569.18.

On BSE, so far 56,026 shares were traded in the counter as against average daily volume of 87,956 shares in the past one quarter.

The stock hit a high of Rs 237.25 and a low of Rs 227.60 so far during the day. The stock had hit a record high of Rs 286.85 on 3 March 2015. The stock had hit a 52-week low of Rs 201.55 on 4 August 2014.

Ahead of Q2 results, the stock from a recent peak of Rs 254.60 on 15 July 2015, had dropped 7.97% to Rs 234.30 on 27 July 2015.

The stock had outperformed the market over the past one month till 27 July 2015, rising 3.08% compared with Sensex's 0.9% decline. The scrip had also outperformed the market in past one quarter, gaining 1.98% as against Sensex's 1.41% gain.

The large-cap cement manufacturing company has equity capital of Rs 310.38 crore. Face value per share is Rs 2.

Ambuja Cements' net profit fell 44.7% to Rs 226 crore on 7.9% decline in net sales to Rs 2493 crore in Q2 June 2015 over Q2 June 2014. Ambuja Cements attributed the decline in bottom line during the quarter to lower operating EBITDA (earnings before interest, taxation, depreciation and amortization) and due to additional depreciation charge of Rs 22 crore on implementation of Schedule II of the Companies Act, 2013.

The company's operating EBITDA dropped 34.7% to Rs 384 crore in Q2 June 2015 over Q2 June 2014.

Ambuja Cements said that Q2 June 2015 witnessed muted cement demand. Sales volume increased marginally by 1.6% to 5.88 million tonnes in Q2 June 2015 over Q2 June 2014. However, due to decrease in selling price by approximately 10%, overall net sales value was lower by 7.9% in Q2 June 2015 over Q2 June 2014. Lower cost of input materials coupled with improved operational efficiencies has helped in reduction of overall costs, the company said. Nevertheless, these could not fully mitigate the impact of lower sales realisation, the company added.

With regard to future business outlook, Ambuja Cements said that mixed macro-economic indicators are pointing towards sluggish growth in cement demand in short term. With the onset of monsoon throughout the country, cement demand is expected to remain subdued in the next quarter, Ambuja Cements said. The long term outlook for cement demand remains positive due to Government's initiatives towards housing, concrete roads, smart cities and emphasis on infrastructure developments, the company said. Ambuja Cements said it would continue to focus on improving its performance.

Ambuja Cements' board of directors at its meeting held yesterday, 27 July 2015, approved the amalgamation of Dirk India, a 100% subsidiary of Ambuja Cements with the company, subject to necessary approvals.

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